Business Blog Postshttps://www.ftc.gov/feeds/oig-reports-press-releases.xml
enSelling genetic testing kits? Read on.https://www.ftc.gov/news-events/blogs/business-blog/2019/03/selling-genetic-testing-kits-read
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Elisa Jillson </span>
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<p>If you sell genetic testing kits to consumers, you’re probably familiar with the Genetic Information Nondiscrimination Act (GINA), which prohibits discrimination on the basis of genetic information under some circumstances. You’re also familiar with the Health Insurance Portability and Accountability Act (HIPAA), which protects health information collected by certain types of entities. Then there are laws enforced by the FDA and the Centers for Disease Control and Prevention that pertain to genetic testing kits.</p><p>These laws might – or might not – apply to your company. But when you’re thinking about your data practices, keep in mind another law that probably does apply to your business: the Federal Trade Commission Act.</p><p>The FTC Act prohibits unfair or deceptive trade practices. Implementing sound privacy and security practices can help you keep your company in line with the FTC Act. Here are a few tips on how to do that.</p><h2>Consider describing uses of genetic information in one featured place.</h2><p>Yes, it can be challenging to write a privacy policy that gives the right level of detail and is easy for consumers to understand. But there are practices that can make that task easier. Let’s say Company A responds to this challenge by creating a lengthy privacy policy with the discussion of genetic information buried in an overview of personal information generally. The right information is all there, but digging it out will require some excavation. As a result, consumers might struggle to understand the company’s most important data practices: What does it do with genetic information? With whom does it share this sensitive data? And how can the consumer make sure the company will expunge information upon request? Contrast that with Company B, which creates a stand-alone policy about genetic information or devotes a prominent section of a larger policy to that key topic, perhaps using graphics, color, or other cues. Companies sometimes say they’re stymied about how to convey privacy-related information clearly. Our suggestion is to start with the same principles that are second-nature to marketers: clear language, visual emphasis, and eye-catching presentation.</p><h2>Explain who can see what profile information – and let users know about important changes.</h2><p>Account settings can have a big effect on the privacy of genetic data. When you’re explaining those settings, make sure you state clearly who can see what information in user profiles. If anything significant changes, tell your customers right away so that they can make an informed choice about the current state of service. For example, suppose Company C’s privacy policy informs consumers that only other users can see their profiles. Now suppose Company C later reaches a deal to permit researchers to be “users” of the service, so that the researchers can access the DNA-derived matching information in customers’ profiles. If Company C doesn’t amend its privacy policy and account settings page to explain this expansion of “users” and doesn’t notify customers of the change, it risks misleading them. Similarly, consider Company D, which launches a new feature enabling users to see the location of their matches. If Company D doesn’t take steps to alert customers of the change, it, too, runs the risk of deceiving its customers. Also, keep in mind that tweaking your privacy policy might not be enough. If you plan to use your customers’ data in a manner that is materially different from what you promised them at the time of collection, make sure to obtain affirmative express consent for the new use.</p><h2>Help users to make choices with set-up wizards and appropriate default settings.</h2><p>When faced with numerous notices about thorny topics like health, medical research, and privacy, some consumers may feel overwhelmed. You can help your customers with this notice-overload problem with some simple design choices. First, consider creating a set-up wizard that walks users step-by-step through a registration process that addresses the choices you offer about those topics. Second, think through the defaults of any settings you offer. Starting off with privacy-protective settings for sensitive information and uses – with the option for consumers to opt in for more expansive sharing – will reduce the likelihood that consumers will feel blind-sided by uses or disclosures of their sensitive information they didn’t expect.</p><h2>Explain third-party disclosures clearly.</h2><p>Context can make a big difference in how consumers perceive your claims. If Company E asks its customers for consent to “share” their genetic information with researchers for important medical studies, some consumers might reasonably expect that “sharing” to involve a not-for-profit arrangement with an entity like a research university. Customers expecting this kind of sharing may be deceived if Company E is, in fact, selling users’ genetic information to a pharmaceutical company. To avoid deceiving consumers, Company E should explain its practices clearly – for example, by choosing more precise wording or by prominently clarifying the nature of the “sharing.”</p><h2>Consider one-stop-shopping for expunging genetic information.</h2><p>Consumers might not appreciate that genetic testing services often hold two types of genetic information about them: a physical sample (like saliva) and DNA information derived from that sample. Suppose Company F describes in its privacy policy the process for deleting genetic information, without referencing its entirely separate process for destroying the physical sample. Customers of Company F might be surprised to learn that, post-deletion, the company still holds their genetic information – in other words, the physical sample. Company F should avoid misleading consumers about the ability to expunge all genetic information. A better practice would be to explain both processes together (and any limitations on them) in the privacy policy and in appropriate places in its user interface.</p><p>Basic truth-in-advertising principles also apply to marketing genetic testing kits.</p><ul><li><strong>Tell the truth about what your genetic testing kit can do. </strong>Under the law, the definition of “advertising” covers pretty much anything a company tells a prospective buyer or user – expressly or by implication – about what a product can do. Whether it’s what you say in a commercial, in a YouTube video, on a website, on the product packaging itself, or via social media, you have to tell the truth. False or misleading claims, as well as the omission of certain important information, can land you in legal hot water. If you make objective claims about your genetic testing kit, you need solid proof to back them up before you start advertising. The law calls that “competent and reliable evidence.” If you claim your genetic testing kit provides benefits related to health, safety, or performance, you may need competent and reliable scientific evidence. If you claim your genetic testing kit is “clinically proven” to work, you must have methodologically sound clinical studies conducted on your kit that demonstrate consumer-relevant results matching your claims. Visit the FTC’s Business Center for more on keeping your claims compliant.</li><li><strong>Disclose key information clearly and conspicuously. </strong>If you need to disclose information to make what you say accurate, your disclosures have to be “clear and conspicuous.” What does that mean? That they’re big enough and clear enough that users actually notice them and understand what they say. Generally, the law doesn’t dictate a specific font or type size, but the FTC has taken action against companies that have buried important terms and conditions in long licensing agreements, in dense blocks of legal mumbo jumbo, or behind vague hyperlinks. Clear and conspicuous disclosures make good business sense, too. Most people react negatively if they think a company is trying to pull a fast one by hiding important information. Users are more likely to continue to do business with a company that gives them the straight story up front. Consult <a href="https://www.ftc.gov/tips-advice/business-center/guidance/com-disclosures-how-make-effective-disclosures-digital">.com Disclosures: How to Make Effective Disclosure in Digital Advertising</a> for compliance advice.<br /> <br /> </li></ul> </div>
Thu, 21 Mar 2019 15:35:02 +0000lfair1507969 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/selling-genetic-testing-kits-read#commentsNixing the Fix: Warranties, Mag-Moss, and restrictions on repairshttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/nixing-fix-warranties-mag-moss-restrictions-repairs
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Lesley Fair </span>
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<p>First, the bad news: That nifty purchase needs a repair. Now the good news for consumers: It’s still under warranty. But where can they go to get it fixed? Can the manufacturer restrict a consumer’s ability to go to the independent repair shop of their choice? Can the manufacturer use glue, non-standard screws, and proprietary diagnostic software that make it difficult for independent repair shops to fix things? Do limitations like these affect consumers’ rights under the <a href="https://www.ftc.gov/enforcement/statutes/magnuson-moss-warranty-federal-trade-commission-improvements-act">Magnuson-Moss Warranty Act</a>? That’s the topic of <a href="https://www.ftc.gov/news-events/events-calendar/nixing-fix-workshop-repair-restrictions">Nixing the Fix: A Workshop on Repair Restrictions</a>, an FTC <a href="https://www.ftc.gov/news-events/press-releases/2019/03/ftc-hold-july-2019-workshop-product-repair-restrictions-seeks">event</a> scheduled for <strong>July 16, 2019</strong>.</p><p>Enforced by the FTC, the Magnuson-Moss Warranty Act helps consumers make informed buying decisions and gives them access to remedies if the widget starts to fidget during the warranty period. One key consumer protection under Mag-Moss is that the law prohibits manufacturers from conditioning warranty coverage on the use of particular products or services.</p><p>Here are some of the questions FTC staff intends to ask at <a href="https://www.ftc.gov/news-events/events-calendar/nixing-fix-workshop-repair-restrictions">Nixing the Fix</a>:</p><ul><li>What’s the interplay between repair restrictions and the Magnuson-Moss Warranty Act’s anti-tying provision, which establishes that manufacturers can’t condition coverage on the use of parts or services identified by brand, trade, or corporate name?</li><li>Do repair restrictions affect the market for extended warranties and service agreements?</li><li>What types of restrictions are consumers running into when they try to get their stuff repaired?</li><li>Are manufacturers’ restrictions having an impact on small fix-it businesses?</li><li>Are manufacturers using software that may render products obsolete or unfixable if consumers engage in DIY or go to a local repair shop?</li><li>Are repair restrictions necessary to reduce the risk of physical injury or to protect manufacturers from liability for products improperly repaired by others?</li><li>Do consumers understand the effects of repair restrictions?</li></ul><p style="margin-left:0in">We’re also looking for <a href="https://www.ftc.gov/nixing-the-fix-call-for-research">empirical research and data</a> about the prevalence and impact of manufacturers’ repair restrictions. For example, what can you tell us about code that disables products that have been repaired by someone other than the manufacturer, product designs that make third-party repairs difficult (like attaching batteries with glue only the manufacturer can remove), contractual post-sale or licensing restrictions, or proprietary diagnostic software and replacement parts? Please send us your research and data by April 30, 2019. Do you have suggestions about possible panelists? Email us at <a href="mailto:nixingthefix@ftc.gov">nixingthefix@ftc.gov</a>.</p><p style="page-break-after:auto"><a href="https://www.ftc.gov/news-events/events-calendar/nixing-fix-workshop-repair-restrictions">Nixing the Fix</a> will take place on July 16th at the FTC’s Constitution Center conference facility, 400 7th Street, S.W., in Washington, DC. It’s free and open to the public. You can <a href="https://www.regulations.gov/document?D=FTC-2019-0013-0001">file public comments online</a> and we’ll keep the record open until September 16, 2019.</p><p style="page-break-after:auto">Follow the Business Blog for more information about the agenda and for watch-the-webcast instructions.</p><p style="page-break-after:auto"><a href="https://www.ftc.gov/news-events/events-calendar/nixing-fix-workshop-repair-restrictions"><img alt="Nixing the Fix logo" src="https://www.ftc.gov/sites/default/files/nixing_the_fix_logo.png" style="height:90px; width:500px" /></a></p><p> </p> </div>
Mon, 18 Mar 2019 14:24:48 +0000lfair1507549 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/nixing-fix-warranties-mag-moss-restrictions-repairs#commentsFTC’s 2018 Privacy & Data Security Update: What it means for your businesshttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/ftcs-2018-privacy-data-security-update-what-it-means-your
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Lesley Fair </span>
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<p>Looking to take a deep dive into the breadth and depth of the FTC’s approach to consumer privacy and data security in the past year? The FTC’s website, including the <a href="https://www.ftc.gov/tips-advice/business-center">Business Center</a>, has what you need. But what if you or your clients prefer an at-your-fingertips digest of developments in 2018? We’re got that covered, too. <a href="https://ftc.gov/news-events/press-releases/2019/03/ftc-releases-2018-privacy-data-security-update">The FTC just issued</a> its <a href="https://www.ftc.gov/system/files/documents/reports/privacy-data-security-update-2018/2018-privacy-data-security-report-508.pdf">2018 Privacy and Data Security Update</a> – a compendium for attorneys, business executives, and others who are long on interest, but short on time. It summarizes the seven zones that were central to the FTC’s 360° approach in 2018.</p><p><strong><a href="https://www.ftc.gov/system/files/documents/reports/privacy-data-security-update-2018/2018-privacy-data-security-report-508.pdf"><img alt="Cover of FTC 2018 Privacy &amp; Data Security Update" src="https://www.ftc.gov/sites/default/files/2018_privacy_data_security_cover.jpg" style="float:right; height:309px; margin:20px; width:250px" /></a>ENFORCEMENT. </strong>The FTC’s privacy and data security enforcement experience runs deep, with hundreds of cases filed in recent years. The <a href="https://www.ftc.gov/system/files/documents/reports/privacy-data-security-update-2018/2018-privacy-data-security-report-508.pdf">2018 Update</a> leads off with a summary of cases, warning letters, and other actions linked to the resources you’re looking for and summarized by topic:</p><ul><li>General Privacy</li><li>Data Security &amp; Identity Theft</li><li>Credit Reporting &amp; Financial Privacy</li><li>International Enforcement</li><li>Children’s Privacy</li><li>Do Not Call.</li></ul><p><strong>ADVOCACY. </strong>When government agencies, courts, or other decision makers are considering actions that could impact consumers or competition, the FTC may offer insights based on its years of experience. The 2018 Update describes the FTC’s comments to the CPSC on the Internet of Things and NTIA on privacy. Also included: links to key congressional testimony.</p><p><strong>RULES. </strong>Are you up on what’s what with privacy- and security-related regulations within the FTC’s purview? The Update offers a thumbnail of what each one requires and 2018 developments.</p><p><strong>WORKSHOPS.</strong> The FTC has sponsored more than 70 workshops, town halls, and roundtables to bring people together to talk over emerging issues in consumer privacy and security. In 2018, the FTC hosted PrivacyCon, an international forum on the latest academic research; a workshop on combating cryptocurrency scams; and three events centered on big data, artificial intelligence, and data security convened as part of the ongoing Hearings on Competition and Consumer Protection in the 21st Century.</p><p><strong>REPORTS AND SURVEYS.</strong> To date, the FTC has published more than 60 reports probing consumer privacy and data security issues. Contributions in 2018: a study of mobile security updates and staff perspectives on connected cars, informational injury, and cybersecurity for small business.</p><p><strong>CONSUMER EDUCATION AND BUSINESS GUIDANCE. </strong>Educating consumers and businesses about privacy and data security is critical to the FTC’s mission. In 2018 we distributed millions of brochures in English and Spanish covering everything from fundamental security ABCs to sophisticated defenses against emerging threats. New titles address changes to the law regarding credit freezes, cybersecurity for small business, virtual private network apps, and scams targeting smaller companies, to name just a few. In addition, hundreds of thousands of subscribers receive the FTC’s Consumer Blog and Business Blog, which regularly touch on timely privacy-related topics.</p><p><strong>INTERNATIONAL ENGAGEMENT. </strong>A key part of the FTC’s privacy and security mission is to engage international partners to develop mutual enforcement cooperation on privacy and data security investigations. The FTC also plays a lead role in advocating for strong, globally interoperable privacy protections for consumers around the world. The Update includes highlights of how the FTC worked with international counterparts in 2018.</p><p>How can you use the 2018 Update? Keep it as a handy reference guide, consult the lists and links, reread it when looking for FTC privacy and security resources, and consider it when drafting client alerts, blogs, or social media content about FTC enforcement and policy initiatives.</p> </div>
Fri, 15 Mar 2019 14:02:31 +0000lfair1494725 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/ftcs-2018-privacy-data-security-update-what-it-means-your#commentsRecipe for a ROSCA violationhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/recipe-rosca-violation
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Lesley Fair </span>
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<p><span>From the FTC’s perspective, a certain pattern of online business has become a recipe for <span>consumer injury</span>.</span></p><ol><li><span>Start with a misleading “risk-free” trial offer.</span></li><li><span>Add a hefty undisclosed charge if consumers don’t quickly cancel the “risk-free” trial.</span></li><li><span><span>Cook up </span></span><span>an undisclosed automatic shipment program that sends consumers unordered merchandise.</span></li><li><span>Top with <span>hard-to-follow</span> upsells that add another layer of <span>confusion</span>.</span></li><li><span>Fold in illegal charges to consumers’ credit or debit cards.</span></li><li><span>Freeze out people who try to stop the unauthorized shipments and charges.</span></li><li><span>Cover with straw owners to hide the defendants’ activities.</span></li></ol><p><span>It’s an unappetizing entrée that leaves consumers queasy<span>. An</span>d it’s a marketing <span>scheme </span>the FTC has challenged yet again<span> – this time </span>in a <span><a href="https://www.ftc.gov/news-events/press-releases/2019/02/ftc-continues-actions-stop-deceptive-free-trial-negative-option">lawsuit against Puerto Rico-based Gopalkrishna Pai and eight companies he owns</a></span>, alleging violations of the <a href="https://www.ftc.gov/enforcement/statutes/restore-online-shoppers-confidence-act">Restore Online Shoppers' Confidence Act (ROSCA)</a>.</span></p><p><span>The <span>main ingredients </span>in this case were online “risk-free” trials of skin care products sold in pairs – Vita Luminance and Regenelift, Derma Vibrance and Nuevoderm, Revived Youth Cream and Revived Youth Serum, and Aura Youth Cream and Aura Youth Serum. According to the FTC, the check-out pages led consumers to believe their credit cards would be billed just for a $4.95 shipping and handling fee. Below the large turquoise COMPLETE CHECKOUT button were two small line of grey type that said “Initially, just pay $4.95 for S&amp;H today to fully evaluate Vita Luminance Cream for fourteen (14) days. We know that you’ll love your smooth, wrinkle free skin. You will receive your product within 5 business days.”</span></p><p><span><img alt="Two screens from defendants' websites" src="https://www.ftc.gov/sites/default/files/f9_two_screens.png" style="float:right; height:644px; margin:5px 20px; width:325px" />But there was something buried even below the <span>already </span>hard-to-read fine print: a <span>tiny </span>“terms and conditions” hyperlink. Only by clicking on that obscure link would consumers learn that at the end of the 14- or 15-day trial period, the defendants would charge them the full price of the product – $90 or more – and enroll them in an auto-ship program with recurring charges until they cancelled. </span></p><p><span>The <span>FTC says the illegality </span>didn’t end there. The defendants supersized the misleading deal during the check-out process by claiming to offer <em>another</em> “risk-free” trial of a second product that promised to “maximize your results” for another $4.95 shipping payment. But according to the FTC, that second offer came with the same strings attached, the same unauthorized credit card charges, and yet another undisclosed auto-ship progra<span>m. </span></span></p><p><span>The defendants said on their websites that consumers could cancel anytime by phone or email, but the FTC says that claim, too, was<span> <em>poco fiable</em> – not reliable. In fact, m</span>any of the customer service reps consumers reached <span>spoke only Spanish </span>and the recorded messages on some of the defendants’ phones were only in Spanish. Even if consumers were able to <span>speak with </span>an operator, the FTC says people often received only a partial refund or no refund at all and in many instances the onslaught of unordered merchandise continued.</span></p><p><span>The <span><a href="https://www.ftc.gov/enforcement/cases-proceedings/1723164/f9-advertising-llc">complaint</a></span> also alleges that<span>, </span>to get the merchant accounts he needed to process credit and debit card sales, defendant Pai used more than 100 phony names in an effort to camouflage his operation from payment processing entities and banks. One favorite trick: falsifying employer identification numbers to hide the fact that he was behind all of the accounts. According to the lawsuit, “By doing so, Pai shielded himself from consumer complaints and chargeback disputes related to sales processed through his LLCs’ merchant accounts, thereby evading detection from consumers, financial institutions, and law enforcement.”</span></p><p><span>That wasn’t his only attempt to hoodwink the payment system. According to the complaint, Pai had “clean” sites he showed just to merchant processors – sites that differed markedly from the sites consumers saw. The FTC says those sites were there just for show and didn’t result in product sales. </span></p><p><span>Filed in federal court in Puerto Rico, the <span><a href="https://www.ftc.gov/enforcement/cases-proceedings/1723164/f9-advertising-llc">complaint</a></span> alleges multiple ROSCA violations.</span></p><p><span>By now, online marketers should be aware of the requirements of <a href="https://www.ftc.gov/enforcement/statutes/restore-online-shoppers-confidence-act">ROSCA</a>. The law bans online negative options unless the seller: 1) clearly discloses all material terms of the deal before obtaining a consumer’s billing information; 2) gets the consumer’s express informed consent before making the charge; and 3) provides a simple mechanism for stopping recurring charges. Another thin<span>g </span>marketers should know about ROSCA: the FTC’s continued commitment to challenge violations. </span></p> </div>
Thu, 07 Mar 2019 17:20:07 +0000lfair1471934 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/recipe-rosca-violation#commentsThe FTC takes its subpoenas and CIDs seriously – and you should, toohttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/ftc-takes-its-subpoenas-cids-seriously-you-should-too
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Burke Kappler, Attorney, FTC Office of General Counsel </span>
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<p>The FTC’s ability to obtain information through subpoenas and civil investigative demands (CIDs) is critical to the task of investigating potential law violations. The FTC uses this authority deliberately and responsibly, avoiding unnecessary burdens on businesses and individuals and consistent with our obligations to enforce the law.</p><p>These requests are legally enforceable demands, and recipients of subpoenas or CIDs need to take their obligation to comply seriously. We expect all companies and individuals who receive compulsory process to respond completely and in a timely manner, or to disclose quickly and candidly any obstacles to full compliance. We routinely work with recipients to narrow or defer requests, and generally, we have found that parties cooperate. But not everyone sees the benefits of cooperation, which can often result in delay.</p><h5>Cooperating with staff</h5><p>FTC staff are always willing to work with parties and their counsel to determine the scope of the agency’s subpoena or CID <em>and</em> a timeframe for compliance. In fact, the FTC’s Rules of Practice require parties to meet and confer with FTC staff to identify any issues, problems, or concerns that might affect a party’s ability to comply. As provided in the FTC’s Rules of Practice, based on what we learn from the meet-and-confer session, FTC staff may agree in writing to limit some of the requests or to extend the deadline for compliance. The Rules contemplate some flexibility for staff to modify certain obligations in the demand and the opportunity to meet and confer is an important part of the process. FTC staff expects all subpoena and CID recipients to use this process if they have concerns about their ability to comply in full and on time.</p><h5>What to expect if you don’t comply</h5><p>Not everyone wants to cooperate upon receiving a subpoena or CID. When that happens, the FTC’s Office of General Counsel may get involved in order to obtain judicial enforcement of the Commission’s process.</p><p>The FTC typically seeks to compel compliance only after the subpoena or CID recipient fails to meet its obligations after allowing a reasonable extension and where cooperation has broken down. In just the last three years, the Commission has filed 12 federal court actions against process recipients that failed to comply fully with the agency’s subpoenas and CIDs. In the 11 actions that have been resolved to date (see list below), either the court enforced the subpoena or CID or we settled with the party after they complied with the requests.</p><p>In each of these cases, the respondent either didn’t respond at all, responded with less than full cooperation, or ignored deadlines set by the Commission and its staff. When behavior like this impairs an investigation, the agency has no choice but to seek judicial enforcement.</p><p>In the same vein, the Commission expects recipients to comply with Commission orders adjudicating petitions to limit or quash subpoenas and CIDs. If a recipient fails to comply with such an order, the Commission will now direct the Office of General Counsel to commence enforcement proceedings within 30 days of the established deadline. Subpoena and CID recipients should thus comply promptly with such orders or risk an enforcement proceeding.</p><p class="CxSpMiddle">Here are a few tips to avoid becoming the next case on OGC’s enforcement action list:</p><ol><li class="CxSpMiddle">Respond promptly to FTC staff upon receipt of a subpoena or CID.</li><li class="CxSpMiddle">Take advantage of meet-and-confer opportunities and be forthcoming about any concerns that you have about your ability to comply on time and in full. In meetings or calls, bring people who have knowledge and information about the required documents and information and the efforts necessary to produce them. Provide specific and concrete information – not just guesses.</li><li class="CxSpMiddle">If you run into problems meeting deadlines, call staff immediately. Keep them apprised so they can work with you. Stay in contact. Don’t let deadlines pass without explanation.</li><li class="CxSpMiddle">Understand that the FTC and its staff need to move investigations forward expeditiously. Unsupported requests for extended delays may not be granted.</li><li class="CxSpMiddle">Abide by Commission orders promptly. If you have filed a petition to limit or quash a CID or subpoena and the Commission has ordered some form of compliance, you must do so or risk a potential enforcement action within 30 days of the Commission’s deadline.</li></ol><p>Bear in mind that there are many other factors that affect the timing and course of an FTC investigation. Delaying compliance with a CID or subpoena in hopes that you won’t have to comply at all rarely works, and most often results in follow up from the OGC.</p><h5><br /><span><u><strong>Recent enforcement actions</strong></u></span></h5><p><em>FTC v. Tracers Info. Specialists, Inc.</em>, Case No. 8:16-MC-18TGW) (M.D. Fla. filed Feb. 12, 2016) (enforcing CID)</p><p><em>FTC v. General LLC, et al.</em>, Case No. 3:16-cv-00136-LRH-VPC (D. Nev. filed Mar. 9, 2016) (enforcing CIDs)</p><p><em>FTC v. AFR Financial LLC</em>, Case No. 3:16-mc-45-J-34JRK (M.D. Fla. filed July 29, 2016) (enforcing CIDs)</p><p><em>FTC v. Lexium Int’l</em>, <em>LLC</em>, <em>et al.</em>, Case No. 2:16-mc-00026-JES-CM (M.D. Fla. filed Sept. 16, 2016) (enforcing CIDs)</p><p><em>FTC v. IT Media, Inc.</em>, Case No. 2:16-cv-09483 (C.D. Cal. filed Dec. 22, 2016) (enforcing CIDs)</p><p><em>FTC v. Infante</em>, Case No. 4:17-mc-00008-CAB (N.D. Ohio filed Feb. 7, 2017) (settled upon compliance)</p><p><em>FTC v. Humana, Inc.</em>, Case No. 1:17-mc-01465-ESH (D.D.C. filed June 19, 2017) (settled upon compliance)</p><p><em>FTC v. Redwood Scientific Technologies, Inc.</em>, Case No. 2:17-cv-07921-SJO-PLA (C.D. Cal. filed Oct. 30, 2017) (enforcing CID)</p><p><em>FTC v. Donor Relations, LLC, et al.</em>, Case No. 2:18-cv-00183-GMN-CWH (D. Nev. filed Feb. 1, 2018) (enforcing CIDs)</p><p><em>FTC v. Bartoli</em>, Case No. 6:18-mc-00027-PGB-GJK (M.D. Fla. Apr. 16, 2018) (enforcing CID)</p><p><em>FTC v. Fully Accountable, LLC</em>, Case No. 5:18-mc-00054-SL (N.D. Ohio filed June 8, 2018) (enforcing CID)</p><p><em>FTC v. Swain, et al.</em>, Case No. 2:18mc20 (E.D. Va. July 19, 2018) (settled upon compliance)</p><p> </p> </div>
Wed, 06 Mar 2019 15:48:13 +0000lfair1471983 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/ftc-takes-its-subpoenas-cids-seriously-you-should-too#commentsForum on new forms of financing is strictly businesshttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/forum-new-forms-financing-strictly-business
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Lesley Fair </span>
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<p>When it comes to getting the working capital your company needs, you’re strictly business. Yes, you confer with traditional financial institutions, but like many small businesses, you also may look into online loans and other newer options. Financing for smaller enterprises is the topic of an upcoming FTC workshop. Mark <strong>May 8, 2019</strong>, on your calendar for <a href="https://www.ftc.gov/news-events/events-calendar/strictly-business-ftc-forum-small-business-financing">Strictly Business: An FTC Forum on Small Business Financing</a>.</p><p><a href="https://www.ftc.gov/news-events/events-calendar/strictly-business-ftc-forum-small-business-financing"><img alt="FTC Stricrly Business event logo" src="https://www.ftc.gov/sites/default/files/strictly_business_logo_square.jpg" style="float:right; height:251px; margin:10px 20px; width:300px" /></a>Small businesses are the heart of the American economy and like larger companies, they often need financing to operate and expand. One recent innovation: the online marketplace for small business financing, including term loans, lines of credit, and cash advances. Some options may provide benefits to small business – for example, quicker access to capital – but some products raise consumer protection concerns, like high costs and potentially unclear terms. The FTC is convening this event to hear from stakeholders and get a 360° picture of the developing marketplace.</p><p>Right now, we’re putting together potential panels. If you’d like to be considered as a panelist, email <a href="mailto:smallbizfinance@ftc.gov">smallbizfinance@ftc.gov</a> with a brief statement about your perspective on the issues.</p><p><a href="https://www.ftc.gov/news-events/events-calendar/strictly-business-ftc-forum-small-business-financing">Strictly Business</a> is free and open to the public – and there’s no need to pre-register. The May 8th forum is scheduled for the FTC Constitution Center auditorium, located at 400 7th Street, S.W., in Washington, D.C. (We’re at the L’Enfant Plaza Metro stop.) Can’t make it to Washington? Watch the webcast live.</p><p>Follow the Business Blog for upcoming details about the agenda.</p> </div>
Tue, 05 Mar 2019 15:49:47 +0000lfair1456426 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/forum-new-forms-financing-strictly-business#commentsCybersecurity for small business: Four ways to continue the conversationhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/cybersecurity-small-business-four-ways-continue-conversation
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Andrew Smith, Director, FTC Bureau of Consumer Protection </span>
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<p>When it came to designing the FTC’s <a href="https://www.ftc.gov/tips-advice/business-center/small-businesses/cybersecurity">Cybersecurity for Small Business</a> campaign, you called the shots. We hosted round tables across the country and listened to what business owners had to say. You told us you wanted: 1) No-nonsense advice that’s easy to implement; and 2) Consistent guidance from the different federal agencies that deal with cyber threats and data security.</p><p>Our every-Friday Business Blog series has covered fundamentals like <a href="https://www.ftc.gov/news-events/blogs/business-blog/2018/11/cybersecurity-small-business-physical-security">physical security</a> and <a href="https://www.ftc.gov/news-events/blogs/business-blog/2018/10/cybersecurity-small-business-cybersecurity-basics">cybersecurity basics</a>, as well as tech-centric topics like <a href="https://www.ftc.gov/news-events/blogs/business-blog/2019/02/cybersecurity-small-business-email-authentication">email authentication</a> and <a href="https://www.ftc.gov/news-events/blogs/business-blog/2018/11/cybersecurity-small-business-understanding-nist">NIST’s Cybersecurity Framework</a>. But it’s time for us to turn things back to you. We asked small businesses how they have incorporated the campaign in their offices and here are four ways you’ve told us you’re using the new materials.</p><h2>1. Incorporate resources into in-house training</h2><p>Whether it’s a sales person who connects to your network remotely or someone in the warehouse who processes shipments, every employee is a link in your cybersecurity chain. That’s why savvy businesses build cybersecurity into new employee training and hold periodic refreshers and updates for experienced staff. There’s no need to create a curriculum from scratch. You’ve told us many of the <a href="https://www.ftc.gov/tips-advice/business-center/small-businesses/cybersecurity">Cybersecurity for Small Business</a> modules coordinate with the topics you cover. We also have fact sheets, <a href="https://www.ftc.gov/tips-advice/business-center/small-businesses/cybersecurity/videos">videos</a> and <a href="https://www.ftc.gov/tips-advice/business-center/small-businesses/cybersecurity/quiz">quizzes</a> to help keep your staff engaged – and we’re adding to the inventory.</p><h2>2. Share them with your social networks</h2><p>We’re glad that business owners are sharing cybersecurity resources on their company and personal social networks. In addition, every blog post in this series has buttons at the top so you can share them on popular platforms. You’ll never be at a loss for relevant content. (Soon you’ll be able to share the website and fact sheets in Spanish, too.)</p><h2>3. Spread the cybersecurity word within your industry</h2><p class="MsoHeader"><a href="https://www.bulkorder.ftc.gov/publications/cybersecurity-and-your-small-business"><img alt="Cybersecurity for Small Business cover" src="https://www.ftc.gov/sites/default/files/cybersecurity_for_small_business_cover.jpg" style="float:right; height:159px; margin:5px 20px; width:125px" /></a>“May I publish one of your fact sheets in the newsletter of our downtown business group?” “Is it OK if I hand out your brochure at an industry event?” When requests like that come in, we have two responses: 1) Yes; and 2) Thank you. FTC materials are in the public domain, which means you’re free to republish, link, cite, quote, etc., with no clearance required. We’re grateful for what you’re doing to let other businesses know about the importance of cybersecurity. (By the way, did you know you can order multiple copies of our <a href="https://www.bulkorder.ftc.gov/publications/cybersecurity-and-your-small-business">28-page Cybersecurity for Small Business brochure</a> and related titles at no charge from <a href="https://www.bulkorder.ftc.gov/">bulkorder.ftc.gov</a>?)</p><h2 class="MsoHeader">4. Multiply the impact in your community</h2><p class="MsoHeader">Cybersecurity isn’t an issue just for businesses. Keeping client, volunteer, and donor data secure is an <a href="https://www.ftc.gov/news-events/blogs/business-blog/2018/10/share-cybersecurity-resources-non-profits-your-community">important consideration</a> for the nonprofit sector, too. We’ve heard from business owners who have used the materials to introduce safer data practices to local service organizations, places of worship, charities, and other groups where they volunteer their time.</p><p class="MsoHeader">Those are just some of the ways companies are using <a href="https://www.ftc.gov/tips-advice/business-center/small-businesses/cybersecurity">Cybersecurity for Small Business</a>. How are you using the resources? What can we do to help your company’s cybersecurity efforts? Post a comment and let us know.<br /> </p> </div>
Fri, 01 Mar 2019 16:15:36 +0000lfair1463566 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/03/cybersecurity-small-business-four-ways-continue-conversation#commentsTop frauds of 2018https://www.ftc.gov/news-events/blogs/business-blog/2019/02/top-frauds-2018
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Paul Witt, Supervising Data Analyst, FTC Bureau of Consumer Protection </span>
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<p>Every year, millions of consumers tell us – and our partners – about the frauds they spotted. In 2018, we heard from 3 million people and learned a lot from <a href="https://ftc.gov/news-events/press-releases/2019/02/imposter-scams-top-complaints-made-ftc-2018">the reports entered into our Consumer Sentinel database</a>. Here are some notable facts from the <a href="https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2018">Consumer Sentinel Network’s 2018 Data Book</a> – including that a new category of scams has earned the unenviable right to chant "We’re #1."</p><ul><li><img alt="" src="https://www.ftc.gov/sites/default/files/consumer_sentinel_data_book_2018.png" style="float:right; height:250px; margin:10px 20px; width:400px" />We collected more than 1.4 million fraud reports, and people said they lost money to the fraud in 25% of those reports. People reported losing $1.48 billion (with a <span>“b”</span> ) to fraud last year – an increase of 38% over 2017.</li><li>The top reports in 2018 were: imposter scams, debt collection, and identity theft.</li><li>Younger people reported losing money to fraud more often than older people. Let that sink in. It’s what the data have been telling us for a while, but it’s hard for people to grasp. Last year, of those people who reported fraud and their age, 43% of people in their 20s reported a loss to that fraud, while only 15% of people in their 70s did.</li><li>When people in their 70s did lose money, the amount tended to be higher: their median loss was $751, compared to $400 for people in their 20s.</li><li>Scammers like to get money by wire transfer – for a total of $423 million last year. That was the most of any payment method reported, but we also saw a surge of payments with gift and reload cards – a 95% increase in dollars paid to scammers last year.</li><li>Tax-related identity theft was down last year (by 38%), but credit card fraud on new accounts was up 24%. In fact, misusing someone’s information to open a new credit card account was reported more often than other forms of identity theft in 2018.</li><li>The top 3 states for fraud and other reports (per 100K population) are Florida, Georgia and Nevada. The top 3 states for identity theft reports (also per 100K) are Georgia, Nevada and California.</li></ul><p>The <a href="https://www.ftc.gov/enforcement/consumer-sentinel-network">Consumer Sentinel Network</a>’s online database is available to more than 2,500 users in civil and criminal law enforcement agencies across the country and around the world. Agencies use the reports to research cases, identify victims, and track possible targets. Although non-governmental organizations may contribute data, only law enforcers can access the database.</p><p>Check out what happened in your state. In fact, you can <a href="https://public.tableau.com/profile/federal.trade.commission#!/">slice and dice the numbers</a> yourself. And comment below if you find something interesting. Meanwhile, consumers should keep reporting to the FTC at <a href="https://www.ftc.gov/complaint">ftc.gov/complaint</a>. We use those reports to investigate and bring cases – and so do our thousands of law enforcement partners.</p> </div>
Thu, 28 Feb 2019 17:21:12 +0000lfair1460353 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/02/top-frauds-2018#commentsLargest FTC COPPA settlement requires Musical.ly to change its tunehttps://www.ftc.gov/news-events/blogs/business-blog/2019/02/largest-ftc-coppa-settlement-requires-musically-change-its
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Lesley Fair </span>
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<p>We’ll confess to singing along to a Stevie Nicks song or doing an air guitar solo when no one’s looking. But some people take their lip syncing to the next level. More than 200 million people – 65 million of them in the U.S. – downloaded the Musical.ly app. It gave users a platform to create videos and synchronize them with popular songs. It also allowed users to interact directly with each other. That may sound like fun for aficionados, but it raises concerns for parents, especially given public reports that adults have used the Musical.ly app to contact children. <a href="https://ftc.gov/news-events/press-releases/2019/02/video-social-networking-app-musically-agrees-settle-ftc">The FTC alleges Musical.ly violated the Children’s Online Privacy Protection Rule</a> by collecting personal information from kids without parental consent. The $5.7 million civil penalty is the FTC’s largest ever under COPPA.</p><p>To register for the Musical.ly app, users provided their email address, phone number, full name, username, a profile picture, and a short bio. For the first three years, Musical.ly didn’t ask for the user’s age. Since July 2017, the company has asked about age and prevents people who say the<span>y’re </span>under 13 from creating accounts. But Musical.ly didn’t go back and request age information for people who already had accounts.</p><p>The online library for Musical.ly – now known as TikTok – features lots of tracks popular with tweens and younger children. Once users create videos, they can share them publicly. Other users can comment and “follow” them to see more of their videos. By default, <span>users’ accounts were </span>set to “public,” meaning others could see their bio (which may include their age or grade in school), their profile picture, and username. Users had the option to set their accounts so that only approved followers could see their videos, but even then their bios, pictures, and usernames remained public and searchable.</p><p>By default, the app also let users send direct messages to any other user. Until October 2016, the app included a “my city” tab that gave people a list of other users within a 50-mile radius.</p><p>That’s how Musical.ly worked, so let’s turn to the operation of COPPA. The Rule applies to operators of websites and online services that: 1) are directed to children and collect personal information from them, or 2) are directed to a general audience, but have actual knowledge they’re collecting personal information from kids. If the site or service meets either definition, COPPA requires them – among other things – to get parental consent before collecting personal information from children under 13. The FTC’s complaint alleges Musical.ly was covered under both standards.</p><p>First, the FTC says Musical.ly met COPPA’s definition of a site “directed to children.” How does the agency make that determination? According to <a href="https://www.ecfr.gov/cgi-bin/text-idx?SID=0e3a7803b83580a25aeff8c1dc662026&amp;mc=true&amp;node=se16.1.312_12&amp;rgn=div8">Section 312.2</a> of the Rule,<span> data about audience composition is an important factor and in this case, the evidence suggested that a significant percentage of Musical.ly users were under 13. In fact, multiple press articles between 2016 and 2018 highlighted the popularity of the app among tweens and younger kids. The Rule lists additional factors like </span>subject matter, visual content, music, <span>and </span>the presence of child celebrities or celebrities who appeal to kids<span>. </span>You’ll want to read the complaint for the details, but the FTC also cited Musical.ly song folders with titles like “Disney” (featuring music from movies like <em>Toy Story</em> and <em>The Lion King</em>) and “school” (featuring songs about school-related subjects or school-themed TV shows and movies). In addition, the complaint mentions the colorful emojis users could send to each other – <span>cute animals, smiley faces, and the like</span>.</p><p>Second, the <a href="https://ftc.gov/enforcement/cases-proceedings/172-3004/musically-inc">complaint</a> alleges that Musical.ly had actual knowledge the company was collecting personal information from children. A look at users’ profiles reveals that many of them gave their date of birth or grade in school. And since at least 2014, Musical.ly has received thousands of complaints from parents of kids under 13 who were registered users. In just a two-week period in September 2016, the company received over 300 complaints from Moms or Dads asking <span>Musical.ly </span>to delete their child’s account.<span> Of course, under COPPA it’s not enough just to delete existing accounts. According to the FTC, Musical.ly failed to delete those kids’ videos and profiles from the company’s servers.</span></p><p>The complaint charges that Musical.ly violated COPPA by:</p><ul style="list-style-type:square"><li><span><span>Failing to provide notice on their site of the information they collect online from children, how they use it, and their disclosure practices,</span></span></li><li><span><span>Failing to provide direct notice to parents,</span></span></li><li><span><span>Failing to get consent from parents before collecting personal information from children,</span></span></li><li><span><span>Failing to honor parents’ requests to delete personal information collected from kids, and</span></span></li><li><span><span>Retaining that personal information for longer than reasonably necessary.</span></span></li></ul><p style="margin-left:0in"><span><span>In addition to the <a href="https://ftc.gov/enforcement/cases-proceedings/172-3004/musically-inc">$5.7 million civil penalty</a>, the company has agreed to change their practices to ensure COPPA compliance.</span></span></p><p style="margin-left:0in"><span><span>The primary message for other sites and services is to think twice before concluding “We’re not covered by COPPA.”<span> According to COPPA, whether a company intends – or doesn’t intend – to have a site directed to kids isn’t what controls the analysis. Instead, the FTC will look to t</span>he <span>site’s look and feel, as well as evidence that the company had </span>actual knowledge that user<span>s</span> are under 13. Visit the Business Center’s <a href="https://www.ftc.gov/tips-advice/business-center/privacy-and-security/children%27s-privacy">Children’s Privacy page</a> for resources to help streamline your responsibilities under COPPA.</span></span><br /> </p> </div>
Wed, 27 Feb 2019 17:57:43 +0000lfair1462831 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/02/largest-ftc-coppa-settlement-requires-musically-change-its#commentsFTC to advertisers: Bills-for-shills product reviews are a no-gohttps://www.ftc.gov/news-events/blogs/business-blog/2019/02/ftc-advertisers-bills-shills-product-reviews-are-no-go
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Lesley Fair </span>
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<p>In explaining FTC cases, we try to give readers a behind-the-scenes perspective and sometimes the most accurate insights are out of the mouths of corporate insiders. In the <a href="https://ftc.gov/news-events/press-releases/2019/02/ftc-brings-first-case-challenging-fake-paid-reviews-independent">FTC’s first case challenging fabricated reviews on an independent retail site</a>, consider an email from the CEO of Brooklyn-based Cure Encapsulations about a weight loss pill it was selling. Writing to an outfit that promised to “push your product towards the top” of Amazon by using bogus, paid-for reviews, the CEO said:</p><p style="margin-left:70px; margin-right:70px"><span>“As </span>I told you yesterday, I need 30 reviews 3 per day.</p><p style="margin-left:70px; margin-right:70px">Because of my upcoming holiday, I will not be able to watch my reviews not to get sabotaged by competition.</p><p style="margin-left:70px; margin-right:70px">The goal of my competition is to bring me down to a 4.2 overall rating, and I need to be at 4.3 overall in order to have the sales.</p><p style="margin-left:70px; margin-right:70px">I am sending you now another $200 and will pay you total of $1000 additional to the cost of the reviews if you stand on the product, and make sure the next 12 days if someone post a negative review you add real positive reviews from real aged accounts (no proxy vpn vps) to make it back to a 4.3 overall.”</p><p>A few minutes later, the CEO followed up with this message: “Please make sure my product should stay a five star.”</p><p>100% of the company’s $12.8 million in sales were generated on Amazon. That’s where the defendants claimed their Quality Encapsulations Garcinia Cambogia supplement was a powerful appetite suppressant, caused significant weight loss, and “block[ed] the formation of new fat cells.” Not surprisingly, <a href="https://ftc.gov/enforcement/cases-proceedings/172-3113/cure-encapsulations-inc">the FTC challenged those claims as deceptive</a>.</p><p>But the more intriguing aspect of the case is the company’s use of what the FTC alleges are false five-star reviews on Amazon. Here are just a few examples of what purportedly satisfied customers were supposedly saying about the defendants’ product:</p><ul><li>“Wow. I’m actually still amazed that it worked way faster than I expected. I have lost 20 pounds by using these amazing capsules. The pills help you with your intake of food, cleans all toxins from your body and does not allow fat or sugar to stick. Highly recommended!”</li><li>“I used Garcinia Cambogia for few weeks. Feeling great now! Lost about 10 pounds! Amazing and safety product. A very good product! 5 Star!!!”</li><li>“I am in-love with this product. It is amazingly simple to use but extremely effective. I lost around 8 pounds in roughly weeks of use and best part of it is I don’t get hungry. I have also noticed that i have been feeling amazing everyday since i began using the pill. Best of all, i have noticed no negative side effects and have had great weight loss results.”</li><li>“At first I was skeptical about purchasing these since they aren’t exactly cheap supplements but I can tell you that these supplements really do work and I based my purchase off of findings and research. I have lost 10 pounds in the first week of using these. I will definitely be recommending this to my family and friends.”</li></ul><p><img alt="Amazon page for Quality Encapsulations product" src="https://www.ftc.gov/sites/default/files/li_quality_encapsulations.jpg" style="float:right; height:220px; margin:10px 20px; width:350px" />Except they weren’t truthful reviews and they weren’t posted by actual purchasers. They were phonies fabricated by one or more third parties paid by the defendants to generate fake reviews on Amazon – <a href="https://ftc.gov/enforcement/cases-proceedings/172-3113/cure-encapsulations-inc">a practice the FTC alleged to be false and deceptive</a>.</p><p>In addition to requiring future weight loss and disease claims to be supported by clinical testing, the settlement in the case includes a financial judgment of $12.8 million, which – based on the defendants’ financial condition – will be partially suspended upon the payment of $50,000 to the FTC and the payment of their outstanding 2017 federal and state tax obligations. (Of course, if it turns out the defendants haven’t been truthful about their finances, the FTC reserves the right to ask the court to make the full amount due immediately.)</p><p>The <a href="https://ftc.gov/enforcement/cases-proceedings/172-3113/cure-encapsulations-inc">proposed order</a> includes additional provisions worth noting. First, the defendants must send an FTC-approved email to everyone who bought the garcinia cambogia pills, letting them know about the false advertising case and attaching a National Institutes of Health fact sheet that says, among other things, “Garcinia cambogia has little to no effect on weight loss.” What’s more, the defendants must contact Amazon, identifying all reviews on the site that they or people working for them bought.</p><p>The message to marketers couldn’t be clearer: The use of bills-for-shills product reviews violates the FTC Act.</p><p>To answer your questions about product reviews, visit the <a href="https://www.ftc.gov/tips-advice/business-center/advertising-and-marketing/endorsements">Endorsements</a> page in the Business Center and read <a href="https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking">The FTC’s Endorsement Guides: What People Are Asking</a>.<br /> </p> </div>
Tue, 26 Feb 2019 18:17:26 +0000lfair1456433 at https://www.ftc.govhttps://www.ftc.gov/news-events/blogs/business-blog/2019/02/ftc-advertisers-bills-shills-product-reviews-are-no-go#comments